The National Public Procurement Policy Unit of the Irish Department of Finance has published draft Regulations aimed at transposing the new Remedies Directive (Directive 2007/66 EC) into Irish law. The purpose of the new Remedies Directive is to improve the effectiveness of national review procedures. The Regulations were published on the Department of Finance's procurement portal (www.etenders.gov.ie) on 22 April. The NPPPU has only published the draft Regulations for the public sector but it is likely that the Regulations for the utilities sector will take into account comments made during the consultation on the public sector remedies regulations. The consultation will run until 27 May 2009. The final deadline for implementing the Remedies Directive into national law is 20 December 2009.
Key features of the draft Regulations are as follows:
- New obligation on a contracting authority in notifying its decision to provide sufficient information to enable an unsuccessful tenderer to decide whether there are grounds for seeking review of the decision;
- Option for unsuccessful bidders to request contracting authority to carry out an internal review of the decision;
- Standstill periods of 14 days and 16 days depending on the manner of communication of the decision;
- No standstill requirement for contracts not requiring prior publication (e.g. Part B service contracts) and for call-off contracts under framework agreements and dynamic purchasing systems;
- Time frame for initiating court proceedings reduced to 14 days and 16 days depending on the manner of communication of the decision – longer periods where the remedy sought is ineffectiveness;
- Where proceedings are initiated, the contracting authority cannot conclude the contract until the High Court gives leave for the contract to be concluded;
- New remedy of ineffectiveness available for illegal direct awards, failure to comply with standstill periods and breaches in relation to call-off contracts;
- Where there are overriding reasons requiring the contract to continue, the Court may impose alternative penalties of a fine of up to 20% of contract value or €1m and/or termination or shortening of contract duration.
A summary of the main provisions of the draft Regulations is provided below.
The Review Body
The designated review body for review procedures in Ireland continues to be the High Court. However, the draft Regulations provide for an optional application to the contracting authority itself for reconsideration of a reviewable decision. An application for reconsideration can only be made on grounds that (i) the decision allegedly infringes Community law of national law transposing Community law; (ii) the applicant has or had an interest in obtaining the relevant contract; and (iii) the applicant alleges that he or she has been harmed by the alleged infringement. It is not possible to apply for a reconsideration of a decision where the contract has been concluded or in relation to a decision to award the contract to a particular tenderer or candidate.
The draft Regulations require contracting authorities when notifying unsuccessful candidates or tenderers of the award decision to provide (i) details of the applicable standstill period and (ii) a statement of the reasons for rejection of an application or tender and "if the tenderer so requests in writing" the characteristics and relative advantages and name(s) of successful tenderer or framework participant(s) or the reasons for a non-equivalence decision or reasons in relation to failure to meet performance or functional requirements. The Regulations also impose a wider obligation on contracting authorities to provide sufficient information to enable an unsuccessful tenderer to decide whether there are grounds for seeking review of the decision. Information may be withheld on limited grounds (e.g. where law enforcement may be impeded, where it would be contrary to the public interest or where there would be prejudice to commercial interests of economic operators or prejudice fair competition).
Under current legislation, contracting authorities are required to comply with a minimum mandatory standstill period of 14 days or 7 days for accelerated procedures. The draft Regulations retain a standstill period of 14 calendar days if the notice is sent by fax or electronic means and provide for a period of 16 days where the notice is sent by other communication means. There is no separate standstill period for accelerated procedures. The standstill period runs from the beginning of the day following the day that a notice is sent. The draft Regulations provide a derogation from the standstill period for contracts not requiring OJEU publication (e.g. non-priority service contracts), a contract where there is only one candidate or tenderer and for call-off contracts under frameworks and dynamic purchasing systems.
Time limit for Review
Under current Court Rules (Order 84A), the time limit for initiating review proceedings is at the earliest opportunity and in any event within three months from the date when the grounds for the application first arose. This specific provision has been the subject of a number of cases where applicants have delayed in initiating proceedings. The draft Regulations significantly reduce the time limits for initiating proceedings to a general time limit of 14 calendar days where the notice has been sent by fax or electronic means and 16 calendar days where the notice has been sent by any other means. Different review periods apply where the new remedy of ineffectiveness is being sought – those periods range from ranging from 14 days up to 6 months (the remedy of ineffectiveness is only available in limited circumstances). Court Rules may provide for the Court to grant leave "in exceptional circumstances" for an application to be made out of time. This latter provision differs to current Court Rules where the Court had discretion to extend time where there is "good reason".
The draft Regulations provide that where proceedings are initiated and a contract has not yet been concluded, the contracting authority cannot conclude the contract until the Court so orders. This will mean that in every instance where an unsuccessful tenderer initiates proceedings, the contracting authority will have to seek leave from the Court in order to conclude the contract.
The Court has power to grant the following remedies under the draft Regulations:
- Set aside, vary or affirm the contracting authority's decision.
- Set aside, vary or affirm the contracting authority's reconsideration decision or remit the decision to the contracting authority with appropriate directions.
- Declare the contract to be ineffective.
- Impose alternative penalties.
- Make such other order as is just and equitable.
- Make interlocutory orders.
- Suspend operation of a decision or contract.
- Award damages as compensation for loss resulting from a decision that is an infringement of Community law.
The new remedy of ineffectiveness is available in the following circumstances:
- there has been an award of contract without prior publication of a mandatory OJEU notice and the contracting authority did not (a) consider it was a permitted negotiated procedure (b) publish a voluntary notice in the OJEU stating that it intended to conclude the contract and (c) apply a 14 day standstill period;
- there is a breach of any of the standstill requirements and that breach has deprived the tenderer of the possibility of pursing pre-contractual remedies and was combined with an infringement of the procurement Directives which has affected the chances of the tenderer's applying for a review to obtain the contract; or
- the contracting authority awarded a contract which did not require prior publication in the OJEU or a call off contract which it did not consider complied with procurement rules for call offs and the contracting authority did not (a) send a notice of the contract award decision; (b) send a summary of reasons to the tenderers concerned and (c) apply a standstill period. If a contract is declared ineffective, all contractual obligations already performed are retroactively cancelled, any contractual obligations not already performed are cancelled, any goods provided must be returned (or if they have been consumed an equivalent quantity of similar goods must be returned) and all money paid must be refunded. The draft Regulations provide that nothing in the Regulations "prevents action taken in good faith in reliance on an ineffective contract having legal consequences".
The draft Regulations provide that alternative penalties may be imposed instead of a remedy of ineffectiveness where there has been a breach of a standstill requirement or there are overriding reasons related to a general interest which require the contract to continue. Overriding reasons do not include economic interests directly linked to the contract e.g. delay costs, re-tender costs, contractor change costs. Alternative penalties may be either or both of the following:
- A fine of up to 20% of contract value or €1m
- Termination or shortening of contract duration